Sebi imposes Rs 2,423 cr fine on PACL, 4 directors

Regulator Sebi today imposed Rs 2,423 crore fine on PACL Ltd and its four directors for illegal fund mobilisation through various schemes that were used by the group to garner over Rs 49,000 crore from the public.

While the group, which had collected money in the name of real estate projects among other schemes, was asked by Sebi nearly three years ago to refund Rs 49,100 crore to the investors, the regulator has passed a fresh order to impose a monetary penalty for violation of Sebi's Prevention of Fraudulent and Unfair Trade Practices Regulations. 

The refund process is being overseen by a Supreme Court- appointed committee, which has been able to collect "only a few hundred crores", Sebi said, while noting that the case requires imposition of a much bigger penalty equivalent to three times of the illicit gains made by them.

About the latest case, for which the order was passed today, Sebi said the magnitude of the violation can be assessed from the fact that huge illegal mobilisation of money was made leading to consequent profits to the tune of Rs 2,423 crore in a short span of less than one year.

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Bharat Road Network IPO subscribed 22% on Day 1

The initial public offer of Bharat Road Network was subscribed 22 percent on the first day of the three-day bidding today.

The IPO of Bharat Road Network, a Srei Infrastructure Finance company, received bids for 64,09,765 shares against the total issue size of 2,93,00,000 shares, as per data available with the NSE.

The category reserved for qualified institutional buyers (QIBs) was subscribed 19 percent, non-institutional investors 1 per cent and retail investors 76 percent.

Bharat Road Network has fixed price band of Rs 195-205 per share for its IPO and aims to raise Rs 600 crore.

Net proceeds from the issue will be utilised towards advancing of subordinate debt in the form of interest free unsecured loan to its subsidiary STPL for part-financing of the STPL Project, among others.

INGA Capital, Investec Capital Services and Srei Capital Markets are managing the IPO.

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GDR manipulation: Sebi cracks down on foreign, domestic firms

Cracking the whip, Sebi today barred 19 domestic and foreign entities from securities markets for manipulation in issuances of global depository receipts and warned several others including FIIs. 

The regulator has imposed a ten-year ban on K Sera Sera and Asahi Infrastructure and Projects, which figured among the six companies whose GDR issuances were manipulated, while at least 26 entities including European American Investment Bank AG (Euram) have been warned that all their future dealings in Indian markets should be strictly as per regulations. 

Sebi has been probing misuse of GDRs (Global Depository Receipts) for routing black money back to India for which role of more than 50 individuals and companies was under scanner. 

The modus-operandi typically involves creating an intricate web of entities in offshore locations for multi- layered transfers of funds before bringing them back to India. 

GDR is a popular financial instrument used by listed companies in India, as also in many other countries, to raise funds denominated mostly in US dollar or euros. 

Typically, GDRs are bank certificates issued in more than one country for shares of a company, which are held by a foreign branch of an international bank. While shares trade on a domestic stock exchange, which happens to be in India in the present case, they can be offered for sale globally through the empanelled bank branches.

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RBI includes HDFC Bank in 'too big to fail' list

RBI included HDFC Bank in the list of 'too big to fail' lenders, referred to as D-SIB or domestic systemically important bank.

India's largest lender SBI and private sector major ICICI Bank were classified as D-SIBs in 2015.

With the inclusion of HDFC Bank in the list, there will now be three 'too big to fail' financial entities in the country.

SIBs are subjected to higher levels of supervision so as to prevent disruption in financial services in the event of any failure.

"The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been phased-in from April 1, 2016 and will become fully effective from April 1, 2019," the Reserve Bank said in a statement.

The additional CET1 or core capital requirement will be in addition to the capital conservation buffer, it added.

RBI had issued the framework for dealing with D-SIBs in July 2014.

As per the framework, RBI has to disclose the names of banks designated as D-SIBs every year in August starting from 2015 and place these banks in appropriate buckets depending upon their Systemic Importance Scores (SISs).

SIBs are seen as 'too big to fail (TBTF)', creating expectation of government support for them in times of financial distress. These banks also enjoy certain advantages in funding markets.

On the downside, according to some experts, expectations of government support amplifies risk-taking, reduces market discipline, creates competitive distortions and increases probability of distress in future.

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Sun Pharma sees single-digit decline in revenues for FY18

Pharma major Sun Pharmaceutical Industries said its short-term outlook continues to be challenging and expects a single-digit decline in consolidated revenues for FY18. 

"The short-term outlook continues to be challenging as the US generics industry is facing rapidly changing market dynamics. 

"In the Indian market, there is uncertainty amongst the trade channels due to the GST implementation, although it may be temporary. Given these factors, growth could be a challenge in FY18 and we expect a single-digit decline in consolidated revenues for FY18 over FY17," Shanghvi said. 

The company's consolidated R&D investments for FY18 will be about 9-10 per cent of revenues. 

"Our R&D investment in FY17 was Rs 23 billion, targeted mainly at developing complex generics and specialty products. R&D is the engine, which will drive our journey of moving up the pharmaceutical value chain. 

"We are also investing in enhancing our product pipeline for emerging markets and other non-US developed markets. We continued to build our specialty pipeline during the year and simultaneously investing in developing the requisite front-end for this business in the US. We expect this trend to continue in future as well," the managing director said. 

The company is entering into the third and the most important year of integration of Ranbaxy with the company. 

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Top 5 stocks in which brokerages initiated coverage in August can rally up to 32% in 1 year

The Bulls failed to reclaim control on D-Street in the month of August as the S&P BSE Sensex slipped nearly 800 points or 2.4 percent. But, there was plenty of stock specific action as nearly 20 stocks rose between 50-100 percent in the same period.

Most of the domestic brokerage firms such as SBI, Kotak Private Client Research, HDFC Securities, as well as Equirus have initiated coverage for the first time in certain stocks this week.

We have collated a list of top 5 stocks on which brokerage initiates coverage in August

Bodal Chemicals: BUY| Target Rs 215| Return 28%

SBIcap Securities initiates a coverage on Bodal Chemicals with a buy recommendation and a target price of Rs 215.

NBCC: BUY| Target Rs260| Return 27%

SBIcap Securities initiates a coverage on NBCC with a buy recommendation and a target price of Rs 260. With its excellent track record of implementing complex projects, NBCC has become the de-facto choice for being project management consultant (PMC) for big ticket projects to be rolled out under new government initiatives.

Asian Granito India: BUY| Target Rs603 | Return 32%

Kotak Securities initiated coverage on Asian Granito India Ltd with a buy rating and a target price of Rs603. Asian Granito, promoted by Mr. Kamlesh Patel and Mr. Mukesh Patel in the year 2000, is engaged in the manufacture and sale of ceramic wall and floor tiles, vitrified tiles, digital polished glazed vitrified tiles, digital wall tiles, marble, and quartz.

We value the company at 23x P/E based on its relative comparison with companies in the same segment and riding on consumerism.

Maruti Suzuki India: Long| Target Rs8993| Return 16%

Equirus initiated coverage on Maruti Suzuki for the first time with a long rating and a target price of Rs 8993.

The brokerage firm is of the view that MSIL is a structural growth story and waiting periods on some of its large-selling models will help it trade at premium valuations, similar to what we saw in case of Eicher Motors in the past.

BSE Limited: BUY| Target Rs1200| Return 23%

HDFC Securities initiates a coverage on BSE with a buy rating and a target price of Rs 1200. The Bombay Stock Exchange Ltd (BSE) is Asia’s oldest stock exchange (estd. 1875 and listed in Feb-17).

Long term investors should take cognizance of its recent (if overdue) renaissance under a market savvy management, including its recent listing. With the latest technology platform, BSE claims to be ten times faster than NSE (its much larger competitor).

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GDP growth slows to three-year low of 5.7% in Q1 hit by note ban, GST disruption

The Indian economy grew 5.7 percent in April-June, sharply lower than last year’s 7.9 percent expansion in the same quarter as also the previous quarter’s 6.1 percent growth, signs that the country was still reeling under the shock of demonetization and disruption caused ahead of GST’s roll out.

Data released on Thursday by the Central Statistics Office (CSO) showed that India’s “real” or inflation-adjusted GDP grew at the slowest pace in 13 quarters and is still a long way off from returning to 8 percent growth path, last seen in 2015-16.

It is also the lowest growth since the Narendra Modi-led NDA government came to power in 2014.

India now lags China in the global growth rankings by a fair margin. China, which grew at 6.9 percent in the last two quarters, has bounced back as the world’s fastest growing major economy since January, regaining the status from India after two years.

Importantly, the CSO estimates shows that gross value added (GVA) grew 5.6 percent in April-June lower than the last year’s 7.6 percent growth during the same quarter.

The latest growth numbers is a throwback to 2013-14, when India slid to a decade low sub-5 percent growth, buffeted by a string of corruption scandals at home and uncertain external economic environment.

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